Bad Contracts By The Numbers

Photo by epSos.de via Flickr

But let’s isolate that salary strata and test out Hunter’s claim that we’re talking about a maximum of 10 players. We’ll use last season’s salary data (taken from Shamsports.com) because it covers every NBA player, including those who are set to be free agents and are technically not under contract. (As a side note, I’m well aware the old collective bargaining agreement guaranteed the players, in the aggregate, 57 percent of basketball-related income, meaning that sum of a shade more than $2 billion was heading to the players regardless of how much Eddy Curry made to do nothing. But the distribution of that money is a key issue at play here, and it’s worthwhile to fact-check both Hunter and Stern when they speak publicly).

via The Point Forward » Posts Hunter’s numbers are WAY off in salary talk «

That’s a whole lot of names in the middle-tier of NBA payroll who aren’t worth their weight in Maybach lease payments, and it doesn’t even include the richest mistakes in the filthiest sense of the word – the Vince Carter/Rashard Lewis/Gilbert Arenas-level contract. It’s also an interesting data set. While there isn’t much to definitively conclude by looking at the numbers (not least of which due to the subjective nature of the list to begin with), there are some trends that stand out.

  • On the whole, front offices managed to hold themselves in check reasonably well. 21 of 30 teams had fewer than two Bad Mid-Tier Contracts (BMCs from here on out), and another four had two. The redheaded stepchildren were Indiana, Charlotte (each with 4), Golden State, New Jersey and Milwaukee (3 each). Those five totaled half of the BMCs in 2010-11. Oddly enough, four of the five were among the teams fighting for the last playoff spot in the East – another indication of just how awful the competition for that coveted spot was at the end of the year.
  • The correlation between BMCs and winning wasn’t very strong at all, but there were a few telling signs. First, trying to take on more than one or two BMCs was entering the DAAAAANGER ZONE, Lana-style*. A club with 2 BMCs averaged just .4 fewer wins last year than one with 0 BMCs, 41.25 to 41.66. Having one BMC meant doing even better, on average – 43.9 wins. The Unfortunate Five who dared sign three or more players to awful mid-level contracts, however, fared much worse – 33.2 wins. Those teams that missed the playoffs in 2011 accounted for 61.8% of total BMCs. Second, the true contenders for the championship managed their money incredibly well. The eight semi-finalists in both conferences had only four BMCs among them, two of which belonged to the “Jason Collins shall lead us to the second round” Atlanta Hawks. Three of those eight made it to within whiffing distance of a championship (tip: it smells like a combination of champagne, one dollar bills, and Charles Oakley’s personal brand of smelling salts – the only smelling salts strong enough to wake you from an Oak-punch) without a max player, largely thanks to the beauty of rookie contracts (you’re welcome, Oklahoma City and Chicago!) and the power of friendship (plus the fact that Joel Anthony is a superhero, natch).
*For those who don’t watch Archer, I apologize – both for you missing out on the show and for this joke likely making no sense. It happens.
  • Speaking of maximum deals, the presence of a player on a maximum contract – at every experience level after rookie deals – slightly suppressed a team’s tendency to hand out free money to underdeserving charities, as those with at least one max player averaged exactly one BMC. Teams without a superstar (or without Joe Johnson) averaged 1.29. 6 of the 14 teams without a max contract had more than one BMC. This fits into a larger pattern of payroll distribution, as a max player meant teams were more likely to give more than 50% of their total payroll to their top 3 highest-paid players. This distribution occurred in 81.25% of teams with a max player. Only 33% of teams without a superstar (or Joe Johnson), on the other hand, saw more than 50% go to their top 3.
After posting his breakdown of the bad contracts, Mr. Lowe added a link on his twitter feed to an article referencing a study about payroll distribution in the NBA:
[A] study conducted by professors at Northwestern’s Kellogg School of Management and Stanford business school shows that, in the NBA, one of the deciding factors in team success is not just total money spent, but “pay dispersion.” That is to say, the teams that win are the ones that have a top tier of pay going to a small number of players, who are surrounded by lower-paid role players. Players then establish an instinctual hierarchical structure based on how much they’re paid.

“Teams need to have some mechanism to allow them to coordinate their actions effectively together and coordinate their behavior,” said Adam Galinsky, one of the authors of the study. “How much they’re paid helps establish that.

via Study: Unbalanced payroll leads to success in NBA – NBA – Sporting News.

While it is possible that payroll hierarchy reinforces status on the court, there may be a simpler factor at play here; better players get paid more (or are Joe Johnson). Teams like the Lakers, Heat, Spurs, and Knicks* – who all distribute more than 60% of their payroll to their top 3 players – are paying the best players on their team a large portion of their available salary cap. As a result, there is little room for bad, sizable contracts. And the first three of those teams saw great regular season success, I would argue, due to the aggregate skill of the players they pay the best. Said pay structure may help ensconce roles within each team – after all, the study cited an increase in stats that seemingly correspond to an increase in cooperation: “more assists, better field-goal percentage, more rebounds—the very actions on a court that require coordination among players.” But the simpler explanation, to me, is that better players get paid more, make their teams better and leave little room on the books for big mistakes.

*A fifth squad had its top 3 receive greater than 60% of its payroll: Cleveland. As crazy as it sounds, it makes some amount of sense looking at that roster – even if giving Baron Davis $14 million a year is part of that “sense.” The Cavs only doled out $55 million in salaries last year, and almost half of it went to Davis and Antawn Jamison. Jamison’s deal expires after next season for a significant chunk of change, and Davis is on the books for another two years – barring the use of his ETO in 2012-2013 or Cleveland using a possible amnesty clause on him. Anderson Varejao rounded out the Cavs top 3 at a reasonable $7.3 million last year. They have no bad contracts in this middle range (Boobie Gibson is the fourth-best paid player on the team at just north of $4 million) and look to be in good shape once the double albatross at the top of the payroll is dealt with in whatever way possible. While Jamison and Davis are undoubtedly overpaid, the top-heavy nature of Cleveland’s salary structure says more about their long-term flexibility than it does about the burden of those two contracts.

  • The bright side for teams with a bevy of BMCs is that 10 or more of them, depending on an option year or two, came off the books at the end of last season. The Unfortunate Five in particular can see a bit of a light at the end of the tunnel. 9 mistakes among them expired, and Milwaukee shed two more in a draft day trade. As is to be expected, Charlotte took on one of those contracts, but such is life for the Bobcats. With fewer than one BMC per team going into next season, however, things are looking up. Until, of course, the lockout ends and general managers finally get to sign a whole new round of Travis Outlaws and Josh Childresses. It’s going to be FAAAAANNNN-tastic!

Andrew Lynch

When God Shammgod created the basketball universe, Andrew Lynch was there. His belief in the superiority of advanced statistics and the eventual triumph of expected value-based analytics stems from the fact that he’s roughly as old as the concept of counting. With that said, he still loves the beauty of basketball played at the highest level — it reminds him of the splendor of the first Olympics — and the stories that spring forth from the games, since he once beat Homer in a game of rock-paper-scissors over a cup of hemlock. Dude’s old.